Shareholder Pushes Johnson Matthey for Hydrogen Unit Overhaul
United States, Monday, 16 December 2024.
Standard Investments, owning 11% of Johnson Matthey, demands board changes and hydrogen unit de-risking. Under current leadership, shareholder returns have plummeted by 53%. Immediate action is urged.
The Call for Change
I’ve been following a significant development in the hydrogen industry today. Standard Investments, holding approximately 11% of Johnson Matthey’s (JM) shares, has issued a striking demand for immediate action [1]. The situation is particularly concerning given that under the current Chairman Patrick Thomas’s six-year leadership, shareholders have experienced a dramatic -53% return on their investment [1].
Financial Struggles
Looking at the numbers, I can tell you they paint a troubling picture. The company’s Hydrogen Technologies business has burned through £310 million ($392 million) since FY22, with mounting operating losses and no clear path to profitability [1]. What’s even more worrying is that while JM reported cumulative free cash flow of £831 million since April 2021, the underlying business actually faced a cash burn of £135 million when excluding disposals [1].
History of Investment Challenges
I find it particularly noteworthy that this isn’t JM’s first struggling venture. The company’s track record includes spending £340 million on its Battery Materials unit, only to sell it for just £50 million due to high capital intensity [1]. Standard Investments points to this as evidence of what they call ‘a clear lack of discipline around expected returns and an inability to invest thoughtfully’ [1].
Proposed Solutions
The path forward, according to Standard Investments, requires decisive action. They’re calling for a refresh of JM’s board with highly qualified independent directors and are pushing for either de-risking or selling the Hydrogen Technologies business [1][3]. In fact, they’ve gone a step further, urging the board to hire advisors and launch a formal strategic review process that could potentially lead to selling part or all of the company [1].